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"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore

Tuesday, December 25, 2012

Doubts remain over Spanish austerity

Doubts remain over Spain's austerity miracle - Telegraph: " . . . Prof Wyplosz said the contractionary policies across the eurozone are making the task much harder. “There may be a miracle but it is more likely that Europe’s recession will continue through 2013 and 2014 and who knows how long after that,” he said. Spain’s austerity began in earnest with a 5pc cut in public sector salaries in 2010. It deepened last July with the suspension of a “14th month” bonus, equal to a further 7.1pc cut. Even King Juan Carlos took a haircut. The contrast with Italy is striking. The OECD data show that Italy’s labour costs have continued to ratchet up despite perma-slump and drastic fiscal tightening, falling even further behind Germany over the past two years. “The picture for Italy is horrible. They are going in the opposite direction from everybody else,” said Raoul Ruparel from Open Europe. “Mario Monti never really made any progress on labour reform.” Mr Monti’s technocrat government failed to tackle the issue that has bedevilled Italy for 60 years, the rigid structure that mandates equal pay for workers in the cutting-edge Lombardy with the sleepy Mezzogiorno. The reforms were watered down by the Left in parliament and ended in a compromise that gives judges the last say on who can be fired, and pleases no one. . . . "